BCG Transform Index:Nordics
Financial study on sector performance
APRIL, 2023

Disclaimer
The basis for this study is a data set extracted from Capital IQ for companies listed on European stock
exchanges with a minimum revenue of €500 million
Companies from the financial industry and Ukraine/Russia are excluded

The analysis covers data from 2018 through the last twelve months (LTM)
LTM refers to available data from Q4-2021 through Q3-2022
The ranking is based on a comparison with other industries within the same region
Please note that the statements made relate specifically to this data set
1Copyright © 2023 by Boston Consulting Group. All rights reserved.

Our data set includes 1,373 companies, from which 234 are from the Nordics, that meet these selection
criteria

Most resilient
sectors

Most impacted
sectors

Rankingcompared with
European average
BCG
recommendation•

The Metals & Mining sector scores highly across all dimensions, capitalizing on the surging demand after thepandemic (strong economic growth) and price increase from constrained supply in recent past•

The Chemicals sector scores highly across all dimensions, benefitting from the industry's high degree ofdiversification stemming from the wide range of application fields of its products•

Although the Energy sector exhibits poor financial stability, it shows high profitability and solvency, withproducers benefitting from supply constraints and rising prices•

The Health Care sector struggles primarily in profitability and financial stability with a considerable rise in net
debt in LTM•

The Automotive industry's profitability and solvency have been hit particularly hard by rising input prices andsupply chain disruptions, as evident in the substantial share of companies with negative FCF (57% in LTM)

•The Consumer sector struggles across all dimensions, most likely due to strong competition and reduced
consumer spending in times of high inflation•The TMT sector has been more resilient in the Nordics, driven by consolidation across all market segments,
particularly in the years 2019 and 2020•

The Nordic Automotive industry has been more severely affected by rising input prices, declining car sales,and supply chain disruptions, which had a strong impact on automotive suppliers

In the context of persistent crises, companies cannot continue to remain in a reactive firefighting mode, butrather must focus on proactively seizing opportunities supported by an adaptable cost structure (that fitsearnings), a strong financial position, and an adjusted go-to-market strategy. In a nutshell: Resilience is key tobeing successful

Source: BCG Analysis, capitalmind

Take-aways
Operational view
Post-pandemic, revenue is on the rise, andEBITDA margins have returned to pre-Covid
levels except for the consumer sector.
However, the rate of profit growth is now
slowing down—a trend that is also evident
in most other European countries

Solvency
The proportion of Nordic companies withnegative free cashflow has increased inLTM, now amounting to 30%. This is higher
than the European average of 27%

Financial stability
Net debt increased significantly in 2019,decreased until 2021, and then started
rising again in LTM. Unlike other European
countries, there has been a positivechange in the proportion of investmentgrade debt since 2018. In LTM, 73% of thedebt is investment grade, which is a muchhigher percentage than the European
average of 45%

2Copyright © 2023 by Boston Consulting Group. All rights reserved.

Sector performance and resilience in the face of past andprevailing crises

Sectors providing fundamental input for industrial production proved to be themost resilient industries

12345Metals & Mining
Metals & Mining

Chemicals
Chemicals

EnergyEnergyOther
Automotive

Industrials
Other

Profitability

Solvency

Financialstability

981027

89926

1010

222

5

68

19

7

5

517SUM

Industry position in the European ranking
Note: A ranking was assigned to each industry based on its performance in three dimensions. The detailed ranking methodology can be found in the appendix.
Source: Capital IQ, BCG analysis

3Copyright © 2023 by Boston Consulting Group. All rights reserved.

Points given for industry performance in three dimensions

The Consumer sector has experienced the most significant impact in theNordics, exhibiting notably poorer performance than in the rest of Europe

678910

TMT
Industrials

Leisure & Tourism
Health Care

Health Care
Consumer

Automotive
TMT

Consumer
Leisure & Tourism

Profitability

Solvency

Financialstability

44816

64414

38213118102

2

37

SUM

Industry position in the European ranking
Note: A ranking was assigned to each industry based on its performance in three dimensions. The detailed ranking methodology can be found in the appendix.
Source: Capital IQ, BCG analysis

4Copyright © 2023 by Boston Consulting Group. All rights reserved.

Points given for industry performance in three dimensions

Operational view | While overall revenues and profitability have exceeded prepandemic levels, the rate of profitability growth has started to slow down
EBITDA margin in the Nordics in %, 2018–LTM

Revenue in the Nordics in bn EUR, 2018–LTM

6.5%

758
332136113105952

-2.7%

3.4%
784
35
2241

120
97762
33
20
43

117
113

47

263

253

33

37075

2018

3575

71

2019

Note: LTM = LTM Q3-2022
Source: Capital IQ, BCG Analysis

29
71

130

26
192

285

37

38

79

2020

316
4

84

40

1,194
40
142
37
306

-2.0%
10%
16%

9%
14%

86

2021

LTM

29%

35%

31%

17%

19%

13%
25%

12%
21%

31%

33%

17%
19%
12%

13%
21%
11%

15%

22%

26%

2018

2019

383

77

13%

31%

31%

91

8%

14%
19%

10%
13%
21%

19%
18%

32%

17%

51

16%

13%

11%

30%

53

5

23.1%

11%

9%

22%2020

AutomotiveChemicals

Health Care

Leisure and Tourism

TMT

Consumer

EnergyIndustrials

Metals & Mining, Const. Mat.

Other

31%

13%

24%

2021

31%

14%

21%

LTM

5Copyright © 2023 by Boston Consulting Group. All rights reserved.

25.1%

Solvency | Following a steep increase in LTM, 30% of Nordic companies havenegative FCF, which is slightly higher than the European average of 27%

234
73%

2021
27%

234
70%

LTM
30%

743%
57%

743%
57%

48

875%

88%

25%

13%

48
63%
38%

15

2173%

86%

27%

14%

815

2180

88%

87%

67%

68%

33%

33%13%

13%

80
70%
30%

4

650%
100%
50%
0%

4650%

100%
50%
0%

1926

68%

73%

32%

27%

1926

79%

81%

21%

19%

TMT

Other

22%

16%

Total

Europeanbenchmark fornegative FCF in LTM
Positive FCF

27%

Automotive

Consumer

Chemicals

EnergyHealth Care

Industrials

Leisure andTourism

48%

28%

28%

31%

21%

29%

16%

Metals &Mining,
Const. Mat.
32%

Negative FCF

Source: Capital IQ, BCG Analysis

6Copyright © 2023 by Boston Consulting Group. All rights reserved.

Distribution of companies with negative/positive FCF in 2021 and LTM

Financial stability | Although there has been a substantial increase in net debt
over LTM, the percentage of investment-grade debt remains high
EBITDA margin in the Nordics in %, 2018–LTM

Revenue in the Nordics in bn EUR, 2018–LTM
18.6%

54.2%

186

176

126
33

121
6
1

21

722

58

36
1
16

4630
728
741

43

39

34161

30
6730

33191
137

29

4
24

7

221

13

94
27

15%
26%

22%

2018

2019

2020

2021

Investment Grade

Mid-Grade

LTM

Chemicals

Health Care

Leisure and Tourism

TMT

EnergyIndustrials

Metals & Mining, Const. Mat.

OtherAutomotive
Consumer

13%

13%
17%

2021

2019

-1

73%

5%
17%

2020

2018

-1

1864%

70%

181969%

182

13926

14192

78%

66

1

198

6%
21%
LTM
Sub-Performing

1. The ratings are based on the Net Debt/EBITDA leverage measure. Debt with a Net Debt/EBITDA ratio below 3.5 is considered investment grade, while debt with a ratio between
3.5 and 4.5 is classified as mid-grade. If the ratio exceeds 4.5, it is considered sub-performing debt. If EBITDA is negative, net debt is automatically classified as sub-performing.
Source: Capital IQ, BCG Analysis

7Copyright © 2023 by Boston Consulting Group. All rights reserved.

-7.0%

8Copyright © 2023 by Boston Consulting Group. All rights reserved.

Appendix

BackupProfitability

Solvency

Financial stability

Total ranking

The profitability ranking isbased on EBITDA growth
between 2019 and LTM, with
the industry having the lowest
EBITDA growth being assigned
the fewest points (1) and theindustry with strongest EBITDA
growth the most points (10)The solvency ranking is basedon the growth sector's overall
cash account LTM, thepercentage of companies withgrowth in cash LTM, and theinterest coverage ratio, withthe worst overall performanceassigned the fewest points (1point) and the strongest themost points (10)The financial stability
ranking is based on the LTM
equity ratio and net debt rank,which is determined by
the proportion of mid-grade
and sub-performing debt, withthe worst overall performanceassigned the fewest points andthe strongest the most points

Once the points for eachdimension have beendetermined, a total ranking
score is calculated by summing
the points of each dimension.
The highest sum of pointsindicates the bestperformance, the lowest thepoorest performance

9Copyright © 2023 by Boston Consulting Group. All rights reserved.

Ranking methodology

Backup

Number of Nordic companies within each industry in the underlying database234• Companies listed
on European stock
exchange with atleast €500M
revenues

80
48
7

8

Automotive Consumer Chemicals

Source: Capital IQ, BCG Analysis

15

Energy21

HealthCare

4

Industrials

LeisureandTourism

6

Metals& Mining,
Const. Mat.

19

TMT

26

• Financial industryand companies
from Ukraine andRussia excluded

Other

10Copyright © 2023 by Boston Consulting Group. All rights reserved.

Selection criteria:

Backup

The data set consists of European companies that meet the selection criteria
for this study
1,373
244

105
78
28

39

4335
12
32 7238
165 632
1 22 15551 45
158 1 3

8TotalCount ofcompanies
that meetselectioncriteria

68

95

Source: Capital IQ, BCG

11Copyright © 2023 by Boston Consulting Group. All rights reserved.

159 164

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